These three words are causing a potential problem for the Abbott government

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“Competitive evaluation process”.

This is the phrase being touted by Prime Minister Tony Abbott and Defence Minister Kevin Andrews as the method for deciding who will build Australia’s new submarine fleet.

Yesterday, after surviving a motion to spill the leadership, Prime Minister Tony Abbott declared “good Government starts today”, but cracks are beginning to appear in his last-minute partyroom pledge to deliver a “competitive evaluation process” for the multi-billion dollar defence contract.

“What we have always intended to have is a competitive evaluation process… you would expect the Australian government to give Australian suppliers a fair go,” he said on Sunday night.

But today, the issue is already starting to emerge as the first big test of his leadership as South Australian MPs and voters try to get clarity on just what his last-minute pledge meant.

Senator Sean Edwards told the ABC that when he spoke with the Prime Minister following the announcement he was promised the Australian Submarine Corporation (ASC) would be able to participate in the process.

“There’s been a lot of conjecture about what an evaluation and a tender is but I know what I discussed with the PM on Sunday and I have been representing it faithfully ever since,” Edwards said.

A decision is expected by the end of the year, but there had been growing fears that the tender would go to Japan and the South Australian-based, government-owned Australian Submarine Corporation would miss out.

Reuters reported that sources have said Australia is strongly considering buying a version of the 4,000-tonne Soryu-class submarine built by Japan’s Mitsubishi Heavy Industries and Kawasaki Heavy Industries.

Independent South Australian Senator Nick Xenophon told the ABC he was apprehensive of the government’s three word pledge.

“If the prime minister was genuine about the subs being built in Australia he could have, should have, announced that there would be a competitive process culminating with a build right here in Australia,” he said.

Here are the key points of contention:

  • Late last year Treasurer Joe Hockey seemed to rule out the possibility of an open tender process.
  • Abbott promised Senator Sean Edwards the Australian Submarine Corporation (ASC) would get a look in.
  • Newly appointed Defence Minister Kevin Andrews has been hesitant to label the Future Submarine program a “tender”.
  • Labor planned to double the size of the outgoing Collins class fleet, promising to build 12 new subs
  • Abbott reduced this commitment, for now, to at least 8 subs, the first of which is due in 2026

In December Treasurer Joe Hockey seemed to rule out the possibility of an open tender for the project, estimated to be worth between $20 billion and $40 billion.

“There are very limited suppliers, and there are very limited number of suppliers that can actually deliver a submarine to Australia at a time when the Collins class are being decommissioned,” Hockey said.

“It usually takes 10 to 15 years to build a submarine from development stage to outcome in the water. Labor knew that. The first Collins class sub is decommissioned in 2026, so we’ve run out of time in a sense and we need to make decisions now.”

In November former Defence Minister David Johnston went on the warpath in the Senate basically telling the Government-owned the ASC it has no chance of getting the multi-billion dollar contract.

Jonhston launched a tirade against the ASC after being pressed by Labor over his pre-election promise to build the subs locally, saying he wouldn’t trust the Adelaide-based shipbuilder “to build a canoe”.

He later retracted his comments but it was all too late, with Labor Senator Penny Wong calling for the ministers removal from cabinet.

“No-one believes this minister can conduct the procurement process fairly,” Wong said.

This week newly appointed Defence Minister Kevin Andrews confirmed there would be a “competitive evaluation process” but it’s unclear how this will work, when it will occur and what kind of cost and capability considerations the government will impose.

“I’m working through this in a very careful, cautious, methodical way,” Andrews said.

“I am the Defence Minister. I am deciding the way in which we’re going forward in this and the way we’re going forward in this competitive evaluation process.”

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